How to Sustain Recent Financial Gains: Fix Old Risks and Meet New Challenges

Posted on April 17, 2013 by iMFdirect

GFSRBy José Viñals

(Versions in  عربي ,日本語, Español)

Policymakers’ decisive actions  since our last report in October have increased global financial stability by reducing acute risks.

  • In the euro area, policymakers averted a financial cliff.
  • In the United States, the worst fears of the fiscal cliff had been averted, while balance sheet repair and continued monetary easing have supported financial markets and the recovery.
  • In Japan, new policy initiatives have caught the imagination of global markets that Japan may finally leave its deflation valley.

But our latest Global Financial Stability Report concludes that improved financial markets and gains in financial stability will not be sustained—and new risks are likely to emerge—unless policymakers address key underlying vulnerabilities.

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Filed under: Economic Crisis, Europe, Finance, Financial Crisis, growth, International Monetary Fund | Tagged: , , , , , , , , , | Leave a Comment »

The Fiscal Milestone: Achievements, Fatigue, and Prospects

Posted on April 16, 2013 by iMFdirect

Fiscal Monitor

By Carlo Cottarelli

(Versions in عربي , 中文, 日本語, and Español)

The 2008–09 global economic crisis pushed public debt ratios of advanced economies to levels never seen before during peacetime. These high debt levels expose countries to a loss of market confidence and, ultimately, damage long-term growth prospects.  Since 2010 advanced economies have been on a journey: the goal is to bring their public finances back to safer territory. They are in it for the long haul, not a sprint, and, as a redress of the large fiscal imbalances created by the crisis, without derailing the still fragile economic recovery, it requires a steady and gradual pace of adjustment—at least for countries not subject to market pressures.

This year we see the process of gradual fiscal adjustment reaching two symbolic milestones. First, the average deficit of advanced economies as a share of GDP will fall to half of its 2009 level at the peak of the crisis. Second, the average debt ratio will stop rising, after increasing steadily since 2007. Indeed, it will actually decline slightly.

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Filed under: Advanced Economies, Economic Crisis, Europe, Financial Crisis, Fiscal policy, International Monetary Fund | Tagged: , , , , , , , | Leave a Comment »

How To Make A Graceful Exit: The Potential Perils of Ending Extraordinary Central Bank Policies

Posted on April 11, 2013 by iMFdirect

Erik Oppers MCMBy Erik Oppers

This spring monetary policy is the talk of the town.  It is everywhere you look, it’s unique, and you’ve never seen anything quite like it before: short-term interest rates at zero for several years running, and central bank balance sheets swelling with government bonds and other assets in the euro area Japan, the United Kingdom, and the United States.

But the meteoric rise of this once dusty topic can’t last.  The end of these unconventional monetary policies will come and may pose threats to financial stability because of the length and breadth of their unprecedented reign.  Policymakers should be alert to the risks and take gradual and predictable measures to address them.

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Filed under: Advanced Economies, Economic outlook, Economic research, Fiscal policy, International Monetary Fund, Investment | Tagged: , , , , , , , , , , , , , , , | 1 Comment »

Scenes From A Central Bank: A Turkish Tale in Two Acts

Posted on April 2, 2013 by iMFdirect

By Robert Tchaidze and Heiko Hesse 

In mid 2010 the Turkish central bank decided to introduce a policy that increased uncertainty in interest rates hoping that would stop foreign investors who were pouring money into the country in search of a quick buck. That’s right. ‘Keep calm and carry on’ was replaced by ‘Keep them guessing.’

The Turkish economy was overheating.  Money poured into the country from foreign investors attracted by a strong economy and high yields. A lending boom resulted in excessive growth along with an appreciating exchange rate and widening current account deficit. While evidence of success, these kinds of capital inflows are a headache policymakers would rather avoid, as they expose a country to risks that affect the economy and financial system as a whole, while undermining the objective of controlling inflation.

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Filed under: Advanced Economies, Economic research, Employment, Europe, Finance, Fiscal policy, growth, International Monetary Fund | Tagged: , , , , , , , , , , , | 1 Comment »

Make the Most of What You’ve Got: Small States in the Spotlight

Posted on April 1, 2013 by iMFdirect

Min ZhuBy Min Zhu

The economies of small states have unique features. They have relatively higher costs, higher public spending needs, and more volatile economies. And their growth has not matched the improved economic performance of the rest of the world since the late 1990s, despite their many efforts over the years. We wanted a better grasp of why this is so we can better tailor our advice and support. Here is what we found.

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Filed under: Asia, Emerging Markets, growth, IMF, International Monetary Fund | Tagged: , , , , , , | Leave a Comment »

Time for Change—Shifting Energy Spending in Africa

Posted on March 28, 2013 by iMFdirect

Antoinette SayehBy Antoinette M. Sayeh

(Versions in 中文, Français, 日本語, Русский, and Español)

For many years, countries in sub-Saharan Africa have spent large amounts on subsidizing fuel and electricity. For both sources of energy combined, this averages around 3-4 percent of GDP. That’s about the same magnitude as public spending on health in many countries. Now we need to ask some important questions. Is this a good use of scarce resources?  Where does this money go? Is it helping to support the livelihood of the poorest in African economies?  Is it helping to boost the country’s competitiveness? The answers are largely, no. I believe this money can and must be used better to invest in the critical physical and social infrastructure required to sustain growth in sub-Saharan Africa. A recent IMF paper backs this up.

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Filed under: Africa, Emerging Markets, Finance, Fiscal policy, Français, growth, International Monetary Fund, Low-income countries, Politics | 1 Comment »

Subsidizing Energy Consumption: Why it’s Wrong and What Can Be Done About it

Posted on March 27, 2013 by iMFdirect

Carlo CottarelliBy Carlo Cottarelli

(Versions in Español, 中文, Français, 日本語, and Русский)

Let’s face it. Everybody loves cheap energy. Almost all human activities require energy consumption and, if something is so basic, it seems pretty obvious that it should not be denied to anyone and government should make it as cheap as possible to both households and companies, including through subsidies. This can help households avoid paying exorbitant energy bills at the end of the month, something that the poor may not be able to afford even for basic needs like heating and cooking.

Companies may also need energy subsidies to help them stay competitive. Energy subsidies appear even more appropriate, and even the obvious thing to do, in countries that have a large supply of energy, like oil producers. After all, this natural wealth in the form of energy belongs to the people; why shouldn’t it be cheap?

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Filed under: Africa, Economic research, Español, Finance, Financial Crisis, Fiscal policy, Français, growth, Inequality, International Monetary Fund, Low-income countries, Middle East, Politics, عربي | Tagged: , , , , , , , | Leave a Comment »

Support the People, Not Energy in the Middle East and North Africa

Posted on March 27, 2013 by iMFdirect

Masood AhmedBy Masood Ahmed

(Versions in عربي, 中文, Français, 日本語, Русский, and Español)

Of all the regions in the world, the Middle East and North Africa region stands out as the one that relies the most on generalized energy subsidies. In energy-rich countries, governments provide subsidies to their populations as a way of sharing the natural resource wealth. In the region’s energy-importing countries, governments use subsidies to offer people some relief from high commodity prices, especially since social safety nets are often weak.

The question is: does this well-intended social protection policy represent the most efficient way to channel aid to the most vulnerable? The answer is no!

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Filed under: Emerging Markets, Finance, Fiscal policy, growth, IMF, Investment, Middle East, Politics, عربي | Tagged: , , , , , , , , | Leave a Comment »

An Open and Diverse Economy To Benefit All Algerians

Posted on March 18, 2013 by iMFdirect

Christine LagardeBy Christine Lagarde

(Version in عربي)

I was in Algiers last week, my first time as the Managing Director of the IMF. It was a good visit: we reaffirmed the special partnership between Algeria and the IMF, and I was able to gain a deeper insight into Algeria’s aspirations—and also its challenges in reaching a hopeful future.

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Filed under: Africa, International Monetary Fund | Tagged: , , , , , , , , , , , , , , , , , , , , , , , , | Leave a Comment »

What We Can Do To Improve Women’s Economic Opportunities

Posted on March 8, 2013 by iMFdirect

Christine LagardeBy Christine Lagarde

Versions in  عربي, 中文, Français, 日本語, Русский, and Español

Today, I invite all of you to celebrate International Women’s Day. Let’s celebrate the incredible progress women have made over the past decades in different parts of society, playing a key role in economic life that our grandmothers worked for and dreamed about. Today, although men still dominate the executive suites in most professions, women all over the world hold high positions in the private sector and in public office. Women are no longer the Second Sex Simone de Beauvoir wrote about.

But far too many women face the most fundamental challenges: the right to safety and to choose the life they want.

Across the globe, fewer women than men are in paid employment, with only about 50 percent of working-age women participating in the labor force. In many countries, laws, regulations and social norms still constrain women’s possibilities to seek paid employment. And all over the world women conduct most of the work that remains unseen and unpaid, in the fields and in households.

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Filed under: Africa, Asia, Europe, growth, International Monetary Fund, Latin America, Middle East, Politics | Tagged: , , , , , , , , , , , , , , , , , , , , , , , | Leave a Comment »

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